Westpac boss does not foresee an Australian property crash
Westpac boss Gail Kelly has rejected fears of an Australian property crash, saying the recent rise in mortgage arrears is not a big concern for economy or the bank’s profits.
“There has been some concern about housing within the Australian context, but I remain very confident about housing in Australia,” she says.
“Delinquencies have picked up, but that is entirely within our expectations (and) it is off a low base.”
She says the modest fall in house prices is “quite healthy.”
“It’s really a softening rather than any underlying concerns, so I remain very confident about the Australian housing situation,” Kelly says.
Westpac reported in May that its mortgage delinquency rates of 90 days or more had risen to 0.56% from 0.43%.
At the time Kelly rejected concerns about the rising delinquencies in her mortgage book dating back to any GFC lending binge.
Kelly said the arrears were no more than expected in a $300 billion mortgage book, with just 0.56% of the 1.5 million customers 90 days or more late in repayments.
She says first-home owners are underrepresented in the delinquency figures.
“The first-home owner segment continues to perform better than the average of the portfolio,” she says.
“It is counter-intuitive, but when you think about it … the first-home owner is often in an improving scenario in their career because they’re a young accountant, doctor, lawyer, banker, and they’re in a rising income pattern in their career.
“And they’re often married, and we don’t factor in the full extent of both incomes,” she told the Australian Financial Review.
Kelly says the broader economy, which is underpinned by strong fundamentals including the resources boom and low unemployment.
“Because new lending growth has been lower recently, it magnifies that delinquency pattern,” she says.
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